Credit Connect

UK Finance has released its latest mortgage data. On a non-seasonally adjusted basis, the data shows that total mortgage lending declined in September but remained higher than in the same month last year.

On a seasonally adjusted basis, lending to first-time buyers and movers was higher than in August, and there were year-on-year increases by volume and value. Remortgaging held up month-on-month and was stronger than a year ago as borrowers sought to fix their mortgage costs ahead of a widely anticipated increase in Bank base rate. Buy-to-let borrowing for house purchase declined in September but was at the same level year-on-year. (The full seasonally and non-seasonally adjusted data can be downloaded at the bottom of the page.)

The proportion of household income used to service capital and interest repayments declined in September for both first-time buyers and home movers to 17.3% per cent and 17.5 per cent respectively.

The typical loan size for a first-time buyer declined from £140,000 in August to £138,016 in September. Their average household income also declined but by a smaller amount proportionately, from £41,259 to £40,826. That meant the income multiple edged down from 3.63 to 3.61.

The average amount borrowed by home movers in the UK declined from £182,785 the previous month to £180,000, and the average mover household income declined month-on-month from £56,102 to £55,581. This meant that the average income multiple went down from 3.40 to 3.39.

Commenting on the data, UK Finances head of mortgage policy June Deasy said “Although lending slackened in September, it remained higher than a year ago. Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November. Over the last year, the number of loans for remortgaging has been higher than in any period since 2009. Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point. While this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.”

Data highlights include:

First-time buyers borrowed £5.1 billion, down 11 per cent on the previous month but four per cent higher than in September 2016. This equated to 31,100 loans, down 10 per cent month-on-month and one per cent year-on-year.

Home movers borrowed £6.9 billion, down 18 per cent on August but six per cent higher year-on-year. This equated to 32,200 loans, down 17 per cent month-on-month but three per cent higher than a year ago.

Home-owner remortgage activity totalled £6.4 billion, the same amount as in August but 16 per cent higher than a year ago. The number of remortgage loans totalled 35,900, three per cent lower month-on-month but 13 per cent higher than a year ago.

Gross buy-to-let lending totalled £2.9 billion, down nine per cent on August but four per cent higher than in September 2016. That equated to 18,900 mortgages, down eight per cent month-on-month but up four per cent year-on-year.

On a non-seasonally adjusted basis, UK Finance data shows that mortgage lending in the third quarter rose:

Home buyers borrowed £38.2 billion, up 11 per cent on the second quarter of the year and 12 per cent on the third quarter of 2016. This equated to 199,600 loans, up nine per cent on the second quarter and seven per cent on the same period last year.

Within this, first-time buyers borrowed £15.7 billion, up five per cent on the last quarter and nine per cent on the third quarter of 2016. They took out 95,800 mortgages, up four per cent quarter-on-quarter and five per cent year-on year.

Home movers borrowed £22.4 billion, up 14 per cent on the second quarter and year-on-year. This equated to 103,800 loans, up 13 per cent quarter-on-quarter and nine per cent compared to a year ago.

Home-owner remortgage activity totalled £19.5 billion, up 14 per cent by value on the second quarter and 11 per cent on a year ago. The number of remortgage loans totalled 110,000, up 12 per cent quarter-on-quarter and 10 per cent on a year ago.

Gross buy-to-let lending totalled £9.3 billion, up 11 per cent on the second quarter and four per cent on the second quarter of 2016. This equated to 60,000 mortgages, up eight per cent on the previous quarter and six per cent year-on-year.

Chart 1: Number of loans to home owners, 2007-17

Buy-to-let lending in September

Buy-to-let activity continued to be driven by remortgaging, which accounted for more than two-thirds of total lending. Buy-to-let house purchase and remortgaging activity in September remained at a similar level seen since the change in stamp duty on second properties introduced in April last year.

Chart 2: Number of loans for buy-to-let

Table 1 – Number of loans for house purchase and remortgage in September

Table 2 – Number of loans for house purchase and remortgage in Q3 2017